Uncategorized – Houstonius

Must a prospective apartment tenant be treated differently if that prospective tenant has an emotional support animal Yes, under both federal and Texas fair housing laws, a prospective tenant with an Emotional Support Animal (ESA) must be treated differently than a standard pet owner. In the eyes of the law, an ESA is not a pet; it is considered an "assistance animal" (a medical tool), similar to a wheelchair or a prescription. 1. Key Legal Protections Under the Fair Housing Act (FHA) and the Texas Fair Housing Act, landlords must provide "reasonable accommodations" for people with disabilities. This means: No Pet Fees or Deposits: You cannot charge pet rent, a one-time pet fee, or an additional pet deposit for an ESA. "No-Pet" Policies Don't Apply: Even if your property has a strict "no pets" rule, you must generally allow a documented ESA. No Breed or Weight Restrictions: You cannot deny an ESA based on its breed (e.g., Pit Bulls) or size, unless that specific animal poses a documented safety threat. 2. What You CAN Ask For You are not required to take the tenant's word for it. You have the right to request: An ESA Letter: This must be from a licensed healthcare professional (doctor, therapist, or psychiatrist). Established Relationship (New for 2026): Recent updates to Texas guidelines emphasize that "ESA certificates" purchased from instant-download websites are often insufficient. You can require that the letter come from a provider with an established therapeutic relationship with the tenant. Note on Diagnosis: You cannot ask for the tenant’s specific medical diagnosis or their medical records. You can only ask for confirmation that they have a disability and that the animal provides a disability-related benefit. 3. When Can You Deny an ESA? While the protections are strong, they are not absolute. You may deny the request if: Direct Threat: The specific animal has a history of aggression or poses a direct threat to the safety of others. Property Damage: The animal causes "substantial" physical damage to the property that cannot be reduced by another accommodation. Undue Burden: Accommodating the animal would cause an "undue financial or administrative burden" (though this is a very high bar to prove in court). Small Owner-Occupied Buildings: If you live in one unit of a building with four or fewer units (the "Mrs. Murphy" exemption), you may be exempt from certain FHA rules. Summary Table: Pet vs. ESA FeatureStandard PetEmotional Support AnimalStatusLuxury/AmenityMedical NecessityPet Deposit/RentAllowedIllegalBreed BansAllowedIllegalRequired ProofNoneLicensed ESA Letter

Sixth degree Black Belt in Real Estate? Last week I attended the funeral of the “Father of American Karate” Allen Steen. It was attended by a group of karate notables including a dozen 10th degree black belts and several grand masters. He got his black belt while attending the University of Texas in Austin in 1963. He became a 10th degree black belt and he defeated Chuck Norris and Joe Lewis, well know fighters. He owned a chain of 10 karate schools... If you go to ChatGPT ioe Gemini.google and type in “ Texas Blood and Gut”, it will discuss Allen Steen and others in the Texas fight circuit who were concerned with power, not points. For 4 years, I was program director and an instructor at his school in central Dallas and was fortunate to travel and train with numerous champions in the Texas area. Then I 1977 I moved closer to family in Houston, where I was born…. But I think I grew in Dallas. After ten years with a world wide investment banking firm, I got smoked out by a bad market.I went to work with my father’s very successful property Tax Consulting firm, but it was a part time seasonal business. I continued to help him while I began selling home for a national real estate brokerage for 12 years and then transferred to their commercial real estate brokerage office for 5 years.I yearned to have my own brokerage firm, so I pasted that exam. Over time time brokerage 139 multifamily apartment properties.The funeral of Allen Steen and reminiscing old memories with the karate dignitaries that attended. I ask the question. Am I a black belt in Real Estate?As Senior property tax consultant representing thousand of properties at 5 Appraisal Districts and also hundreds of brokerage buy and sell transactions, I still can not scratch through and change a contract, because I am not an attorney.There are numerous tests to pass to be a Real Estate GrandMaster.Agent, Broker, Appraiser, Mortgage Loan officer, Building Inspector, Property Tax Consultant, Property Insurance broker, and Attorney.I suppose I have the experience to be a 6th or 8th degree black belt in Real Estate. Actually, what matters is performance.

The Approaching Commercial Real Estate Financial Crisis: A Looming Threat for Lenders and Borrowers As the commercial real estate (“CRE”) market braces for a potential financial crisis in 2025, the landscape is riddled with uncertainty, creating a precarious situation for investors and stakeholders alike. A high volume of commercial mortgages are set to mature (estimated at $950 billion over the next twelve months), and the financial and operational stresses on borrowers are expected to escalate, resulting in heightened anxiety within the industry. This confluence of factors, including rising interest rates and potential shifts in market demand, could lead to a wave of defaults, significantly impacting both lenders and borrowers. The implications of such a scenario extend far beyond immediate financial losses, as the stability of entire markets could be threatened, prompting a reevaluation of investment strategies. In this blog, we will delve into the causes of this impending crisis, examining the interconnected dimensions of economic fluctuations and borrower vulnerabilities, its potential effects on lenders, and the options available to them in dealing with defaulting borrowers, ultimately providing insights into navigating this turbulent landscape. Understanding the Crisis The CRE market has been under pressure due to several macroeconomic factors. The COVID-19 pandemic accelerated shifts in how businesses use commercial spaces, with many companies adopting remote or hybrid work models that allow for greater flexibility and efficiency. As organizations reassess their spatial needs, this change has significantly reduced the demand for office space, leading to higher vacancy rates and declining property values across many urban areas. Furthermore, the rise of e-commerce has transformed retail spaces, rendering some traditional commercial properties less relevant and further compounding the existing challenges. Additionally, rising interest rates and inflation have increased borrowing costs, squeezing the profit margins of many commercial property owners and making it more difficult for them to sustain their investments. These intertwined issues have created an uncertain outlook for the CRE sector, prompting stakeholders to reevaluate strategies and adapt to the evolving landscape of commercial real estate. As we approach 2025, a significant number of commercial mortgages are set to mature, marking a pivotal moment in the financial landscape. Many of these loans were originated during periods of low interest rates and high property valuations, which created an illusion of stability and growth. Now, borrowers find themselves grappling with the complex challenge of refinancing these loans in a less favorable economic environment. With property values depressed and borrowing costs elevated, obtaining new financing may not be feasible for many. This situation raises serious concerns about the potential for widespread defaults in the commercial real estate sector. The ripple effects of these defaults could extend beyond individual borrowers, impacting lenders, investors, and the overall economy. In light of these challenges, it is essential for borrowers to explore all available options, including renegotiating terms with lenders, seeking alternative financing solutions, and proactive financial planning to navigate this difficult transition. Impact on Lenders Lenders, including banks, insurance companies, and private equity firms, are at the forefront of this looming crisis. The impact on lenders can be multifaceted: Increased Default Rates: As borrowers struggle to refinance, default rates are expected to rise. This could lead to a significant increase in non-performing loans (“NPLs”) on lenders’ balance sheets, which can erode profitability and increase the need for loan loss provisions. Decreased Asset Values: The value of collateral underlying these loans,

The real estate industry is experiencing a growing misalignment between what agents believe about private listing networks (PLNs) and what consumers actually want. While 64% of agents say PLNs benefit sellers, a significant 81% of consumers express a clear preference for their home to be listed publicly and for free on widely accessible platforms like Zillow, Realtor.com, or Redfin. Additionally, a majority of agents (56%) believe that PLNs increase home sale prices, yet research shows sellers left more than $1 billion on the table in 2023 and 2024 alone by selling their homes off the MLS. This gap highlights the need for greater transparency and education in listing strategies. Zillow’s January 2025 survey of more than 2,000 U.S. consumers, conducted by The Harris Poll, reveals an overwhelming desire for fair, transparent, and free access to real estate listings. With the increasing use of private listing networks (PLNs) or “private exclusives” by some brokerages, it's critical to understand the implications for consumers and the industry as a whole. Here’s what the data says and why it matters for you, your team, and your business. Knowledge gap: Americans’ awareness of listing practices While the term “multiple listing service” (MLS) is familiar to many Americans, only 32% of consumers aged 45-54 and 23% of those aged 18-34 can confidently say they know exactly what it means. Familiarity with private listing networks and dual agency is even lower across all age groups, signaling a knowledge gap that real estate professionals must address when helping their clients navigate the homebuying journey. Notably, 68% of sellers who worked with a real estate agent said their agent never explained the differences between listing on the MLS versus a private listing network. This lack of clarity can leave sellers uninformed about the potential benefits and tradeoffs of their listing choices. Given the seller agent’s fiduciary responsibility to their clients, this is concerning. Consumers aren’t the only ones experiencing a knowledge gap when it comes to the importance of listing access. A recent Zillow survey highlighted that agents are misinformed about the negative impacts of private listing networks. A similar share of agents believe off-market listings benefit buyers (61%), benefit sellers (64%) and benefit agents (64%)–despite data proving otherwise. Even more concerning, the majority of agents surveyed (56%) said that they believed PLNs increased the sales price of a home — though research shows sellers leave money on the table when they sell off the MLS. The shift toward private listing networks The survey found that 63% of recent home sellers (within the last five years) reported their agents recommended using a private listing network, compared to just 18% of those who sold more than five years ago. This shift raises important questions around the beneficiaries of private networks. Complicating the issue is the disparity among different demographic groups. Hispanic and Black sellers are significantly more likely to have been recommended by a real estate agent to list on private networks (74% and 73%, respectively) than white sellers (24%). This trend warrants careful consideration, as limiting access to MLS listings could exacerbate inequalities in the housing market — whether intentionally or not. Consumer preferences: Transparency and visibility matter The survey highlights that 81% of Americans believe it is important for their home to be listed publicly and for free on platforms like Zillow, Redfin and Realtor.com. This sentiment underscores a core consumer expectation: visibility drives value. Additionally, 86% of respondents agreed that viewing all for-sale home listings should be free for buyers. Furthermore, 81% believe that greater visibility increases the likelihood of a bidding war, potentially driving higher sale prices. These preferences reinforce the critical role that MLS p...

Briefing Document: Converting Houston Offices into Micro-Housing Subject: Feasibility of Converting Vacant Houston Office Space into Affordable Micro-Apartments Source: "Study proposes converting Houston offices into micro-housing - InnovationMap" (CultureMap, Feb 24, 2025) Executive Summary: A recent study by Pew Charitable Trust and Gensler suggests converting vacant office buildings in Houston into affordable micro-apartments as a feasible solution to address the growing housing crisis and high office vacancy rates. This "co-living" model, reminiscent of single-room occupancy (SROs), offers furnished private rooms with shared amenities, significantly reducing construction costs and rental rates. The study proposes a rental rate of $700 per month, inclusive of all costs, making downtown living accessible to low-income earners. Key Themes and Ideas: Growing Housing Crisis and Office Vacancy: Houston faces a double challenge: rising homelessness and high office vacancy rates, exacerbated by the post-COVID shift. "Nationwide, commercial vacancies are becoming increasingly noteworthy as the gap between residential rental rates and stagnant wages widens." Houston's central business district contains 88 office buildings of over 50,000 square feet, 19 of which show reported vacancy rates of over 30 percent." Co-living as a Solution: The study proposes converting vacant office buildings into co-living spaces with micro-apartments, echoing the historical success of SROs. "The “Flexible Co-Living Housing Feasibility Study” found that converting Houston’s empty office buildings to communities of micro-apartments is, well, feasible." Cost-Effectiveness: Leveraging existing building infrastructure, particularly plumbing, significantly reduces conversion costs compared to traditional apartment conversions. "The utilization of existing centralized plumbing on each floor saves an average of 25-35 percent in construction costs that would arise from running new plumbing to each unit." Affordability and Accessibility: The micro-apartment model aims to provide affordable housing options, particularly for low-income individuals, in desirable urban locations. "The proposed rental rate for a furnished micro-apartment in a converted office building in downtown Houston is $700 — all inclusive, with zero move-in costs, as the units are fully furnished." Community Building: Co-living promotes socialization and combats the increasing isolation experienced by single occupants, particularly post-pandemic. "The co-living model allows for a private furnished space, while bathrooms, kitchens, and laundry are shared facilities...this model promotes socialization and community, something that has been trending downward since the pandemic." Prototype Details: The study provides a detailed prototype for a converted building, including floor plans, shared amenities, and individual unit specifications. "The Pew/Gensler report proposes a prototypical building standard of 24 floors, 19 of which are residential, with 60 micro-apartments per floor, or 1,140 residential units per building." "Each individual unit is designed to be 151 square feet...Furnishings include one extra-long twin bed (bedding included), a desk, chair, nightstand, standard-depth half-sized fridge, storage shelf, and cabinet." Key Facts and Figures: Homelessness in the US: HUD reported that in 2024 homelessness was at an all-time high of 770,000 persons, up a staggering 18 percent from the prior year. Houston Homelessness: Houston is on the low end of the national average, with a reported 3,270 homeless persons (4/10,000 Houstonians). Houston Office Vacancy: 19 office buildings in Houston's central business district have vacancy rates exceeding 30%. Houston Median Rent (Nov 2024): $1,297 Proposed Micro-Apartment Rent: $700 (all inclusive) Micro-Apartment Size: 151 square feet

Source: Excerpts from "Motel to Apartment Conversion Deal | Commercial Property Advisors" Main Theme: The document highlights a real-world example of a successful motel to apartment conversion project, emphasizing the potential for creating affordable housing with strong returns through strategic commercial real estate investing. It focuses on the win-win nature of commercial deals, the power of seller financing, and the importance of mentorship. Key Ideas and Facts: Motel to Apartment Conversion as a Profitable Strategy: The central theme is the viability of converting motels into apartment buildings as a lucrative investment strategy, particularly for creating affordable housing. The case study revolves around Jordan's successful conversion of a 16-room motel into 16 apartment units, along with the acquisition of additional multi-family units and a commercial lot. 1031 Exchange for Funding: A crucial element of the deal was the utilization of a 1031 exchange, allowing Jordan to reinvest profits from the sale of a single-family rental property into the commercial property, deferring capital gains taxes. As stated in the document, "To fund this deal, Jordan sold a single family house rental and did a 1031 exchange into a commercial property... It’s a powerful tool to build wealth in real estate and increase your net worth and cash flow." Win-Win Deals: The document stresses the importance of structuring deals where both the buyer and seller benefit. This is achieved by understanding the seller's motivations and needs. As Zig Ziglar said, "If you help enough people get what they want, you’ll get what you want". Seller Financing: When traditional financing fell through, the deal was salvaged and improved through seller financing. This allowed for more flexible terms and the acquisition of an additional commercial lot for a nominal fee. "Jordan sat down with the seller to discuss the property issues and was able to successfully negotiate seller financing terms. These new terms were better for Jordan than a bank loan and Janette is happy because her family will be well taken care of too." Moreover, "$100 Commercial 0.5 Acre Lot... with seller financing, we could pull this off." Property Details and Financials: The document provides specific details regarding the property and the financial aspects of the deal: Property: 16-unit motel with adjoining 9-unit apartment complex and a separate 0.5-acre commercial lot. Purchase Price: $1.35 million ($48,000 per door).After-Repair Value: Projected at $1.8 - $2 million. Down Payment: Funded by the 1031 exchange proceeds. Seller's Win: Janette received $300,000 at closing and will receive $6,000 a month, plus her two children will receive $800,000 in five years. Buyer's Win: Jordan purchased the property below market value, with a significant increase in value after repairs, and potential for further development of the commercial lot. "The price per unit was about $48,000 per unit. Comparable properties in the area are selling for $85-$95,000 a door. The after-repair value is $2 million, and that does not include the half acre lot and the potential development of it once the motel conversion is stabilized." Mentorship: The document underscores the value of mentorship in commercial real estate investing, citing Jordan's reliance on a mentor to navigate the complexities of the deal. Jordan stated, "I couldn’t have done this without you... There are things that you don’t even know that you don’t even know when you’re looking at commercial versus single-family residential." Impact of One Deal: It highlights the potential for a single commercial real estate deal to significantly impact one's financial life. As Jeanine Placide-Carthans commented, quoting the author, "YES! AS PETER HARRIS A L W A Y S SAID, ONE DEAL IN COMMERCIAL REAL ESTATE CAN CHANGE YOUR LIFE !" Target Audience: This information is geared towards individuals interested in commercial...

Briefing Document: Office-to-Residential Conversions in Texas D Subject: Analysis of "What's Holding Back Office-to-Residential Conversions in Texas?" - Texas Real Estate Research Center Source: Texas Real Estate Research Center Website, Article: "What’s Holding Back Office-to-Residential Conversions in Texas?" by Harold D. Hunt, Feb 13, 2025 Executive Summary: This briefing document summarizes the key findings from the Texas Real Estate Research Center article, "What’s Holding Back Office-to-Residential Conversions in Texas?". The article examines the trend of converting older office buildings to residential units (OTR conversions) in Texas, highlighting the factors driving this trend, the challenges involved, and the potential for future growth. The core takeaway is that while OTR conversions are increasing in Texas due to post-COVID office vacancies and a growing housing need, the costly and complex nature of these projects, coupled with a lack of widespread incentives, is hindering more extensive development. The article expresses hope that predicted office "fire sales" will lead to increased conversions. Key Themes and Ideas: Increased OTR Conversion Activity: The article acknowledges a rise in OTR conversions in Texas, particularly since the COVID-19 pandemic, due to the rise of remote and hybrid work and increased office vacancies. "Although the number of conversions is still relatively small, activity has begun to pick up. This is partly due to the popularity of remote and hybrid work post-COVID-19, resulting in elevated office vacancies." National Trend: The article places Texas OTR activity in the context of a larger US trend. It notes a significant increase in U.S. OTR conversions between 2021 and 2024. "Yardi Matrix, a firm providing market intelligence tools to real estate professionals, reported that U.S. OTR conversions increased by 357 percent from 2021 to 2024, with about 55,000 conversions to residential units recorded." "Estimates by Yardi Matrix and commercial real estate services company CBRE are forecasting that the level of future U.S. OTR conversions during the next decade will be somewhere between 1.2 and 1.38 billion-sf. That’s not an insignificant amount." Dallas Leads Texas in Conversions: Within Texas, Dallas is identified as the most active metro area for OTR conversions. "However, the Dallas metro ranked a distant third with 3,163 residential unit conversions in the pipeline. Dallas has emerged as the most popular Texas metro for OTR conversions so far." Challenges of OTR Conversions: The article stresses that OTR projects are "costly and complex" due to the necessary reconfiguration of the buildings. This complexity is a significant barrier to wider adoption. "These types of OTR projects are costly and complex due to the level of reconfiguration that must occur." Incentives as a Catalyst: The article suggests that financial incentives, such as those offered in Houston, can play a crucial role in boosting the number of OTR conversions. The lack of such incentives in other Texas cities is identified as a limiting factor. "In Houston, the Downtown Living Initiative provides up to $15,000 per unit in tax rebates for residential development. Although there are some incentives being proposed in other Texas cities, they are not in place yet." Potential for Increased Conversions Due to Office 'Fire Sales': The article refers to predictions of future office building sales at discounted prices due to financial difficulties. This scenario could create opportunities for more OTR conversions as investors seek to repurpose struggling properties. "Some industry professionals are predicting a wave of office fire sales that could lead to increased OTR conversions of older, less attractive office properties. In an October 2024 Business Insider interview, Richard Barkham, chief global economist for CBRE,

B Executive Summary: The Houston multifamily market in Q4 2024 demonstrated steady, albeit mixed, performance. Overall occupancy remained flat at 88.6%, despite positive net absorption, indicating a balance between demand and new supply. Rent growth, while slightly down quarter-over-quarter, showed positive year-over-year gains, outperforming other major Texas metros. The construction pipeline is tapering, aligning with a more sustainable equilibrium between supply and demand. Job growth in Houston remains strong, fueling continued demand for multifamily housing. Sales activity saw a significant increase in average price per unit, driven by private investors. Key Themes and Findings: Occupancy and Demand:Overall occupancy held steady at 88.6%. "Houston’s multifamily sector experienced its eighth quarter of metro wide demand gains as Houstonians moved into 3,585 units... resulted in overall occupancy to remain flat at 88.6 percent during the fourth quarter." Net absorption was positive at 3,585 units for the quarter and 16,783 for the year, a 61% increase over the previous year. Class A and Class C properties saw positive absorption, while Class B and Class D properties experienced negative absorption. Suburban submarkets like Katy/ Cinco Ranch/ Waterside, Tomball/ Spring, Willowbrook/ Champions/ Ella, and Bear Creek/ Copperfield/ Fairfield, experienced the most significant absorption. 16 submarkets experienced decreased occupancy rates quarter-over-quarter, with I-69 North experiencing the most notable decline of 5.5 percent. Rental Rates:Metro rents averaged $1,274/unit, a slight decrease of 80 basis points quarter-over-quarter. However, Houston was the only major Texas metro to experience positive year-over-year rent growth of 1.0%. "Houston was the only major Texas metro to experience positive 12-month gain, with Austin falling 5.5 percent, Dallas/ Fort Worth declining 1.6 percent, and San Antonio trailing by a slide of 1.0 percent..." Submarkets like Greenspoint/ Northborough/ Aldine, Northline, I-69, and I-10 East/ Woodforest/ Channelview saw annual rental growth exceeding 5.0%. Downtown experienced the largest annual rental rate decrease of 4.7%. Construction Pipeline:The construction pipeline is decreasing, totaling just under 14,300 units at the end of Q4 2024, down from 17,340 units in Q3 2024. "Houston’s construction pipeline totaled just under 14,300 units at the quarter’s close, edging down from 17,340 units in Q3 2024." Completions totaled nearly 6,000 units. Submarkets with the highest construction concentrations include Katy/ Cinco Ranch/ Waterside, Woodlands/ Conroe South, Montrose/ Museum/ Midtown, and Heights/ Washington Ave. Economy and Job Growth:Houston is forecast to add 71,200 jobs in 2025. "Metro Houston is forecast to add 71,200 jobs next year and finish 2025 with over 3.5 million full-time jobs..." Health care and construction industries are expected to lead job growth. The Houston area saw a 1.3 percent increase in single-family home sales in 2024 compared to 2023. Construction contracts awarded through October in Houston totaled $35.9 billion, a 27.6% increase from the same period in 2023. Sales Activity:Average price per unit increased substantially by 28.1% year-over-year, reaching $146,355 per unit. "Investors completed 21 Houston area multifamily property trades during the fourth quarter with acquisitions averaging $146,355 per unit… a substantial 28.1 percent increase from $114,234 per unit during the same period in 2023." Private investors were net buyers of multifamily assets in 2024, while institutional investors and REITs were net sellers. Notable property trades included GAIA Real Estate's acquisition of Virage in Heights/ Washington Ave and Sagard Real Estate's acquisition of Pearl Midlane in Highland Village/ Upper Kirby/ West U. Submarket Highlights (Examples):

Produced by Lester Langdon Texas Commercial Real Estate Briefing: Key Themes and Insights This briefing analyzes recent trends in Texas commercial real estate, focusing on office space dynamics, drawing primarily from the Texas Real Estate Research Center (TRERC) "Commercial Roundup" article dated January 6, 2025. Key Themes: Flight to Quality: Post-COVID, tenants are prioritizing premium office spaces (Class A+), driving positive net absorption in this segment while other classes struggle. Reshuffling of Office Markets: Texas office markets are undergoing a significant transformation as workplace policies evolve, impacting tenant demand and rental rates. Uneven Impact Across Markets: While trends are generally similar, local job growth, industry mix, and existing office stock create unique dynamics in each major Texas metro. Important Ideas/Facts: Office Attendance Lags: Despite office-using employment growing by 500,000 jobs since 2020, office attendance remains at 66% of pre-COVID levels. "This employment growth is not translating into significant office absorption," states the report. Lease Renewals in Flux: Only half of leases negotiated before 2020 have come up for renewal, suggesting the full impact of new workplace policies is yet to be seen. Premium Buildings Thrive: Tenants are gravitating towards the best new buildings, with most markets seeing positive net absorption in Class A+ properties. "This trend represents the decisions of newly arrived firms and existing firms choosing to relocate," the article explains. Varied Rent Growth: Asking rent growth varies across markets and classes. Austin sees little difference between A+ and A, while Dallas witnesses higher growth in A+ and C. Houston experiences uniform growth across classes, potentially reflecting the impact of the previous energy downturn. Future Outlook: The report anticipates continued reshuffling with varying outcomes across markets and neighborhoods. New buildings in dynamic submarkets are likely to attract prestigious tenants, while older Class A and good Class B buildings will stabilize with different occupants. The fate of other buildings remains uncertain, potentially facing renovation, conversion, or demolition. Quotes: "Tenants continue to evaluate their leases in anticipation of future needs. Brokerages and data vendors like CoStar estimate that only half of the leases negotiated before 2020 have come up for renewal, so the full impact of new workplace policies is yet to be seen." "With ten million square feet of office space delivering in 2024, tenants have ample options." "We are in the midst of an office resorting. Differences in local job growth and industry mix, combined with the unique legacies in each market’s office stock, will influence the outcome." Overall: The Texas commercial real estate market, particularly the office sector, is undergoing a period of significant change driven by post-pandemic workplace shifts. While premium office buildings are benefiting from the flight to quality, older and less desirable properties face uncertainty. Understanding these evolving trends is crucial for stakeholders across the Texas commercial real estate landscape. Texas Real Estate Market Dynamics: A Study Guide Short-Answer Quiz Instructions: Answer the following questions in 2-3 sentences each. How has the COVID-19 pandemic impacted office occupancy and absorption rates in Texas? What is meant by the term "flight to quality" in the context of commercial real estate? How have asking rents for different classes of office buildings changed in Austin since the pandemic? What factors contribute to the rent growth observed in Class C buildings in Dallas? How does the Texas Real Estate Research Center (TRERC) gather data for its research? What is the primary focus of the TRERC's "Outlook for Texas Land Markets" conference?

Okay, here's a detailed briefing document summarizing the key themes and ideas from the provided text: Briefing Document: Commercial Office Real Estate Market Downturn D Subject: Analysis of the current state of the commercial office real estate market, focusing on price declines, influencing factors, and potential future trends. Executive Summary: The commercial office real estate market, particularly in major city centers (CBDs), is experiencing a significant downturn characterized by plummeting property values, a disconnect between buyers and sellers, and uncertainty among lenders. This situation is driven by rising interest rates and the increase in remote work, leading to a complex environment where traditional valuation methods are unreliable, and a wide range of actors are approaching the market with differing motivations and strategies. The market is in a state of flux, with increased activity expected in the near term as loans mature and values begin to settle. Key Themes and Ideas: Significant Decline in Office Values: Office buildings in central business districts (CBDs) have lost an average of 40% of their value since their peak in 2022. This decline is described as "one of the most well-telegraphed downturns in recent memory." Suburban offices have experienced a less dramatic, but still notable, decline of about 17%. The wide disparity in value decline between CBD and suburban offices underscores the impact of remote work trends on commercial real estate. The quality of office buildings is playing a significant role in the severity of the value decline, with modern, amenity-rich buildings holding their value better than older or less desirable properties. "Some of these buildings no longer need to exist; while the most modern, amenity-packed buildings may only see a small dip in value." Uncertainty and Price Discovery: A key issue is the lack of consensus on current office building values. "No one really knows" what an office building in a big city is worth. This uncertainty is exacerbated by the fact that "appraisals are all over the map," with discrepancies of up to 25% observed for the same building. Bids on office-backed bonds are also highly inconsistent, highlighting the difficulty in establishing market prices. This "standoff between buyers and sellers" is causing delays in the market's clearing. The market is described as "evolving" with activity "picking up" indicating that the price discovery process is underway. Lender Hesitancy and Loan Restructuring: Banks, which hold a significant portion (just under 40%) of the trillions in U.S. commercial real estate debt, are in a difficult position. The values of the properties that back their loans have fallen and they need to decide how to handle this, with some choosing to delay realizing losses for as long as possible. There is emerging movement from lenders to accept prices that "better reflect the substantial discounts that you need, to attract capital to invest in office." There is a significant volume of U.S. office loans ($265 billion) maturing in 2024 and 2025, which is expected to force more sales and restructurings. This influx of maturing debt is expected to drive increased activity in the market. Buyer Behavior and Strategies: Investors are poised to "pounce on depressed office properties," but deals have been slow to materialize. Many buyers are acquiring debt at a discount as a means to eventually control the underlying properties. This "debt at a big discount to face value" strategy is common during distressed markets. All-cash buyers, including non-traditional real estate buyers, have emerged for smaller, lower-priced buildings, since "there was very little debt available for office buildings." This shows an increase in opportunistic buyers taking advantage of distressed assets. Investor motivations vary, with some willing to put more money in to get loan e...

Okay, here's a briefing document summarizing the key themes and information from the provided text about the apartment building lending market: Briefing Document: Apartment Building Lending Risks Subject: Emerging Risks in Apartment Building Lending Market Prepared For: [Intended audience, e.g., Investment Committee, Executive Team] Executive Summary: This document analyzes the current situation in the apartment building lending market, highlighting growing concerns about potential loan defaults and financial strain on regional banks. A decade-long boom fueled by low interest rates and increasing demand for rental properties is facing headwinds from increased supply, higher interest rates, and rising operating costs. These challenges are causing concern that loans made during the boom may be at risk. Key Themes & Findings: The Boom & Bust Cycle: Boom: Following the 2008-09 housing crisis, lending for apartment buildings surged. The collapse of the single-family home market led to increased demand for rentals. Lending continued to grow, peaking in 2021-2022, fueled by low interest rates and the perception that rental demand would stay strong. Quote: "Following the housing bust of 2008-09, growth in loans on apartments surged, as the collapse of single-family home construction implied that more Americans would stay renters for longer, and demand for apartments and higher rents would likely follow." Quote: "The boom in apartment lending — which grew much more quickly than the much larger market for single-family homes — continued for the better part of 15 years, crescendoing in 2021 and 2022." Bust: The landscape has shifted dramatically due to higher interest rates, a glut of new buildings (particularly in the Sunbelt), and increased operating expenses (e.g., insurance). This has resulted in lower rents and occupancy rates, making it harder for building owners to meet their financial obligations. Quote: "The post-pandemic bout of inflation raised building costs. Simultaneously, a surge of building — particularly in Sunbelt markets — has jacked up inventories, leading to lower rents and lower occupancy." Stress on Regional Banks: Exposure: Regional banks are the largest lenders to apartment buildings, holding approximately 40% of the financing in the sector, creating significant potential exposure to loan defaults. Refinancing Risk: A significant volume of loans are coming due for refinancing in the next few years, estimated at $350 billion between 2023 and 2027, the vast majority of which will need refinancing. Loans originally issued at rates around 3% now need refinancing at much higher rates around 6%, drastically affecting the profitability of these properties. Quote: "Real estate research firm Trepp estimates that more than $350 billion in apartment building bank loans will mature between 2023 and 2027, with the vast majority needing to be refinanced." Quote: "For building owners who received their initial loans at the rock bottom rates of 2021 — around 3% — refinancing at today's rates of around 6% drastically changes the simple math of owning of an apartment building..." Increased "Criticized" Loans: Several regional banks are reporting an increase in "criticized" loans within their multifamily portfolios, indicating a higher risk of default. Factors contributing to these "criticized" loans include construction delays, higher interest costs, and lower occupancy. Quote: "What we are seeing is the multifamily portfolio seeing some increase in 'criticized,'" Quote: "Construction delays, higher interest costs, and emptier-than-expected buildings are the driving dynamics..." Profitability Issues: With higher interest rates on refinancing, many building owners are finding their income insufficient to cover interest payments, potentially leading to defaults if they lack the cash to cover the shortfall. Quote: "For many of these borrowers,

On real estate property .. Buying or selling… What items comprise the price of real estate ? Let us start by knowing that I started giving online info and blogs more than ten years ago in text, audio and video. This year my world changed due to tongue cancer. I can talk with you on the phone if you are patient and listen carefully and is I work to speak clearly. Sometimes my words are not clear due to a tongue which came from my thigh muscle. My thoughts are clear, but it is hard to use my tongue flap. Therefore he voice you may hear, came from artificial intelligence software. I voice banked my real voice, but have not yet decided to use that past voice. It is just past digital also. Phone me to talk on the phone at 2812368189 Moving forward ……. What information is important? It may depend on how the property information is presented ….. or depend on when it is presented…. It is common that real estate agents are experienced in certain types of properties, but do not want to pass up on making money.. representing properties without enough experience in that industry type…. Frequently house seller agents till tell you that they can help. Does selling a automobile repair shop require the same knowledge.. as selling a multifamily apartment building. … If an agent sells new homes, should they also sell country acreage … with has water rights written by an attorney….. That is a changing environment…. Do the clients understand the changes to tax law concerning.. 1031.. Tax ..Deferred ..Exchanges…. There are 3 methods to determine the value of a property…. They are the comparable approach, replacement and also the income approach. The Comparable approach – normally used on residential homes… Replacement approach – how much is the value if we build a new building on the same or similar land ….. then depreciated the new building and assumed it to be a certain age, the same age as the building we are considering…. Investment income approach….. how much is the value of the annual net income this year….. What is the value if we spend X dollars in repairs and get Y in future income cash flow… How long will it take to stabilize the income from new tenants?..... What lender offers bridge loans?... Do we want a big New York lender or a home town local lender? Is your brother-in-law the right lender?..... We ask these financial questions to know the future value, after the property is repaired and stabilized. Sometimes you can not use the income approach to determine value. A good real estate agent should understand how to correctly determine value, because the property may not appraise for contact value. If not renegotiated for new contract. The buyer may lose acquisition costs, such as contract option feasibility fee, building inspection fees, appraisal fees and the cost of your. It is common for a multifamily four plex buyer to try .. to use the income approach to determine a value…. However, that approach is not recognized by licensed appraisers, nor the County appraisal District because there must be 5 doors to rent to be recognized as a commercial property to get a commercial loan….. The licensed regulated appraiser does not have a space on his/her form to input the expenses… only rental revenues… to use the gross multiplier of rents to determine value. This may not be accurate, especially if using the wrong multiplie number. Multiply gross revenues by 5 to get a value 20% higher than a multiplier of 6 times gross. This may be especially true if owner pays all tenant utility bills and rents are higher to cover the costs of “All utility Bills Paid” rental price …. Some buyers of investment property use the income approach which it is not appropriate. 4 or fewer apartments are considered to be residential buildings with residential regulations…. If a home or a 4 plex needs minor repairs, should the owner accept and sign a contract whereby the lender loan is guarantee...

Nam and Nick purchased a new construction three plex multifamily property near the Texas Medical Center and Herman Park. During the Option feasibility inspection period we expected requested and expected to receive the City of Houston Multifamily Dept Certificate of Occupancy. Seller's listing broker never delivered the Certificate of Occupancy. He told me the reason was that City required an interior sprinkler system. I have transacted over 130 multifamily properties and this has not part of the published inspection form. Nevertheless the buyer purchased the property and discovered an orange sticker on the front window of the three plex. Surprise. The city inspector left his phone number one the bright orange sticker. He disclosed other City requirements such as the need for more parking. It is a small land parcel and this city parking requirement may be difficult. Plus Nam and Nick found that the cost of interior sprinklers might be $21,000.. Listen to the above 15 minute conversation Join us on Monday nights at 8PM when we discuss other real estate problems at Stop Real Estate Snakes .com Listen or discuss. Camera is optional

The Zombie virus temporarily stalled the pace of real estate transactions.  All people with roles in the transaction were in the bunker …. Waiting and waiting and waiting. Now it seems there is light at the end of the tunnel and we can venture to investigate transactions. I am noticing a permanent change to the real estate shopping process. The property marketing is now Live online and then pre-recorded online with digital tools using video and 3 dimensional tours and 360 degree cameras. The market for multifamily apartment buildings was in such demand that sellers advertisement remarks said “No interior apartment showings without an accepted signed contract. Do Not disturb tenants.” We can attend online  “Live” Open Houses or watch the pre-recorded Open House. No need to wear a mask when you watch online. I have mounted my camera to a gimbal, which stabilizes the picture and videos. We have panoramic 180 degree photos from ceiling to floor. It allows me to pre-record a guided video tour.  Have not yet tried the hyperspeed nor slow motion. Probably no need inside a building. Your property will have more attendance. Sellers will have more attendance at online property tours, however you will also have more people who attend and decide Not to move forward.  The process is easier and quicker to sort out those who are not interested. Online tours save time but has more dis … appointment. This is good because I expect the marketing process to take longer. The number of days on market will increase, because sellers want the price they expected before the zombie virus and buyers are looking for a good deal as a result.  Buyers and sellers are further apart, which means there are fewer transactions. It may be true that prices have not significantly changes since the zombie virus, but buyers and sellers will need months to know. This is an emotional process which is guided by our personal circumstances and the economic situation.  Time will tell. We can read opinions of expert forecasters everywhere. My experience makes me think the major determinant of your property time on market ….. is the emotional process of the seller and personal circumstances. Unless we find a buyer who has been looking extensively for months wanting your unique property and location. Buyers haver a process also, but it takes a long time. It is common that a buyer starts without knows what the target looks like. Realtors frequently say that the first offer is the best offer.  This is because a buyer has been searching for some time and finally your unique property hits the market and the buyer has been online searching and waiting for the right property and says “This is it”.  Then the buyer agent reminds the buyer that the buyer offer price to purchase should not be more than a bank appraisal. Sometimes a buyer has to learn the market by property tours and by price sticker shock …. Especially buyers are learning the higher prices of central located properties with higher density. It will take a months and maybe years for the expectations of buyers and sellers to narrow the bid and asking price expectations. Update Had a small multifamily in contract on February that is new construction and vacant.  The contract requires the seller to obtain the City Certificate of Occupancy before the closing in Mid March. Then the city permit offices partially shut down.  Some construction crews were limited.   Now we are waiting for people to get to work. City inspectors were slowed with construction permits and approvals of all types of construction and remodeling. Workers needed to stay home with their children because there is no school. We do not yet know about children summer activities We have been filling vacant residential apartments for a $100 fee. It helps owner managers in several ways ·      Advertising ·      Online tenant lease applications ·      Tenant pay $30 for background and credit checks ·      Landlords review each lease in advance before the ...

Questions Did the Corona Zombie Virus change the market or was it just the Black Swan? What were the market characteristics before the Black Swan? Would the market have pulled back looking for any excuse? Any black swan? What will the real estate market look like going forward?  How will home buyers and seller act or react? How will real estate investors act? And how does that change prices? Who are the winners and losers? First we should identify the players … you know most of them. ·      Buyers and sellers ·      Lenders and appraisers ·      Wholesalers or flippers ·      The appraisal districts and property tax consultants ·      Online service providers including internet buyers. Buyers and sellers The real estate market of buyers and seller is a mirror of stock market prices and chart graphs….. but you can not see it plotted on a chart. Real Estate is too variegated with odd irregular transactions making it hard to plot on paper. Real estate investments are like shares of companies. There is good management or sometimes bad management with bankruptcies. Good management is proactive and creative. Bad management is a passive spectator. Some owners should sell to redeploy assets into other investments which they can better manage. Some people should not own real estate.  Some owners have a change of lifestyle and are ready to sell. Buyers of investment real estate were accepting and signing purchase contracts based on promises and hope and expectations.  Sellers sold by offering expectations and hope of future increasing revenues and profits. Offering descriptions and memorandums showed proforma higher rents and good occupancy for 2 years in the future. The Broker of a seller said that …. If you promise to be a good buyer with good management, this will be a good property for you to buy ….. if you realize the forecast of future higher rents and if you make the changes necessary to the improve the property and financial results. The future may show that buyers will require purchase properties to have actual historical revenues and profits and not just future hope and expectations. A big argument is Capitalization Rate, know as Cap rate. It is the reciprocal of Price Earnings Ratio, which is most often referred to when discussing corporate shares and the stock market. % Cap rate is the reverse math of earnings multiple. You divided earnings by the % cap rate to get the value.   Sellers argue lower % cap rate which is a higher earnings multiple.  The Cap Rate % rate variable is affected by the competing interest rates of treasure notes and bonds and mortgages and also bank loan rates. We can argue if the Federal Reserve creates the interest rates … OR  if it follows the market of rates. Nevertheless …. The argument of rates and multiples will continue between buyers and seller and between lender institutions. That is the market. The challenge may be ….. that sellers have expectations also. If you want and hope for a sales price of your home that is not realistic, that will not be supported by a licensed appraiser …… you the seller may have to come to a realization ….. several times.  This takes time and some sellers take longer to deal with these emotional decisions. This is why some homes sell in one week and other homes sell in 18 months.  Sometimes sellers believe they are smarter than their agent/broker. Some sellers have not owned the property long enough to build equity.  The seller can not afford to sell at a loss and can not accept foreclosure … until they must. Sometimes the seller waits several years to sell, with hopes that a good bull market will bail them out.  Waiting will help build equity as the monthly loan payoff decreases and thus the equity increases. Unfortunately those sellers usually do not make much effort for good management. They are do not have creative management projects to spend a nickel and make a dime. Some people might be better suited to be passive investors with partners having better...

Welcome to the Poodle Ranch. These podcast episodes talk about Snakes, Landmines and Grass Fires that I have experienced in my real estate career. After 28 years experience, I have personally toured thousands of properties to make a determination of true value and have over 500 transactions. I frequently say that … I have seen everything and every day I see a different color snake. Recently a prospective client “Robert” came to my office to discuss his real estate objectives. He wanted me to find a good deal to buy at wholesale price. He thought that my purpose is to be his bird dog. We need to work together because the best way to have a good deal … is to find properties to implement good management and add features to increase value to a property. Robert has made only 5 real estate transactions in his life In the last 28 years the world has become more complicated with laws and regulations. Large companies have implemented more guidelines and policies to protect the liability of supervisor jobs and share holder equity. One transaction may involve 19 people and institutions with changing personnel, policies, guidelines and laws. Robert and I discussed potential Snakes, Landmines and Grass fires. Then we agreed that there is a good possibility that a problem will arise which requires experience to solve. With my 28 years experience, I am resourceful to handle each new situation. Normally, a seller will not know or expect a problem. Frequently, Personnel and institution guidelines policies cause problems. Robert decided that I am the broker with skills to handle a problem that nobody knows about, YET. You should schedule a time for us to meet and discuss how to avoid snakes, landmines and grass fires. The best way to “prepare for the unknown” is to have a good team at your side. This applies fully to real estate investing. There are costly dangerous snakes, landmines and grassfires to avoid. Having a good team can turn a regrettable experience into a great, memorable experience. Let’s build your team. On this website, Enroll to get our insights and updates. If you are considering a transaction, contact us to discuss your objectives and discuss how to avoid snakes, landmines and grass fires.

We get many phone calls from interested parties. Often they need help and do not know the questions to ask. We can have a discussion to discover how to start the process. I get phone calls from sophisticated buyers who know everything and some who want help.

What does that mean? What is Not Obvious? If we knew, then it would be obvious. We know it when we see it. With only 5 or 10 real estate transaction, you are less likely to see the snakes, landmines and grassfires. You do not know where snakes are likely to hide. In the last 25 years the world has become more complicated. Government and large institutions have more laws, rules, regulations and policies which change frequently when personnel change the rules and policies or when clerks do not know nor understand their changing rules. With hundreds and hundreds of real estate transactions I know where lenders and government regulators hide the snakes. Sometimes title closing companies help to kill the snakes, but sometimes they are the snake. I have used a well known title insurance closer with years of experience. I send lots of title insurance business to several specific title companies and they will work to help me solve your problem. As you listen to these podcast episodes, you will hear real estate transaction nightmares and how we solved the problem. We want to know your expectations and concerns …. We have 25 years of experience and hundred and hundreds of transactions. We have analyzed thousands and thousands of properties, therefore we know that contracts can be written to solve a problem before it becomes a problem and to protect your money and time. Unfortunately, inexperienced real estate agents and brokers do not know where the snakes hide. My 28 years as a licensed property tax consultant and 25 years with a real estate license … helps me to reveal the Not Obvious …. To anticipate problems. As an example. I know transaction contract language to reduce your future property taxes. In 25 years, I have never seen another broker add language to a contract to save money on future property taxes. Real estate brokerage clients are often too concerned about price and sales commissions. They do not know that I can help with language to reduce property taxes and I may even know how to lenders to reduce interest rate expense or reduce pre-payment penalties. Last year a lender demanded a specific form for a preliminary closing statement from the title insurance company …. On a form which the State of Texas not longer allows, therefore the deal would die three days before the closing date and buyer would lose acquisitions costs. The seller would need to find a different buyer and disturb tenants again for more buyer due diligence needs. I must compliment that title insurance company that I recommended because the closer found the outdated software to create a preliminary copy of the outdated closing statement form and sent it to the clerk at the lending institution. Later the title insurance company created the correct legal updated form to close the deal. Whew. On a separate deal for a small multifamily apartment property, the lender would not accept the legal description used by the county court house. The property was located in Houston, but the post master general is located in a nearby city, therefore the mailing address is not in Houston. The lender wanted the sales contract to show the property address to be in the other city with the postmaster general office. Also a block away, just a year earlier, When selling a four plex, the buyer did inspections and wanted $20,000 in repair money, which we negotiated down to $2,000. They claimed that the electrical boxes needed to be replaced at a very high cost, because they were a fire hazard. The name brand had been discontinued due to the bad publicity. There are 13 other fourplexs in the neighborhood and I had sold 9 of them. They all had the same brand electrical boxes and None of them had a fire since their construction in 1982. When selling a 16 unit multifamily apartment property building, The terms were agreeable to both buyer and seller. The seller agreed to contribute repair money to ...

I have been struggling for several years to understand how to tell prospective clients that they need me. Most prospective clients know what they know and usually do not want to know more (except how much is it worth?) They do not know …. what they do not know. That requires humility and requires that we know our strengths and limits. Do you listen to your doctor and lawyer and accountant? WHY? Probably because they have years of experience, not because they are smarter than you. It is fair to say that if you have done 5 or 10 real estate transactions, you probably should listen to someone who has hundreds and hundreds of transactions of all property types. Yes, there are personality types that need control and think they know more. That may be because of several reasons Maybe I have not conveyed info about my years of experience and knowledge. You should review this entire website. It is not good to tell someone to shut-up and listen because I know more. This might best happen … by me asking the right questions and encouraging the prospective client to ask questions and to express their concerns. You might Ask about my service and about real estate generally and about characteristics of a specific property. Frequently, I can avert your future real estate problems by • Discussing your concerns • Touring the specific property to find future challenges We can translate your concerns and specific property challenges into contractual clauses. This may require experience and knowledge to know where the snakes hide. Make note, this is key….. Usually those snakes hide in institutional rules and regulations and policies and the changing personnel that make those changing documents. Hundreds and hundreds of transactions helps me to know about bureaucratic institutional policies and regulations of lenders and title insurance companies. Some real estate property characteristics and some attitudes of buyers or sellers or brokers, …. make it necessary to write a real estate contract to address future problems, before they become a problem. Normally, the problem is NOT finding a property. However, I must admit that buyers and have to look at numerous properties to realize the market values. And Sellers have to emotionally be disappointed by marketing for months. They do not listen to me …. and to speak fairly … clients should find out for themselves, as most people do when we grow. But hopefully I can give them evidence to shorten their expensive learning habit. A buyer’s time is valuable and sellers do not want their overpriced property to go stale on the market. (experienced brokers know that the first offer is frequently the best offer) How did I get started on this rant? Had a past prospect ask me to help him sell several properties. In the past he asked me to sell two properties that he did not own, so I am careful. So when He asked for my help again and wanted the value of the 3 properties, I said “I do not know their value, Let me do some research and then we can talk again”. I discovered that he owned one third undivided interest in each of the 3 properties. The other owner parties do not want to deal with him. The solution is to swap and let each of the three parties to each own one parcel fully 100%. Make three equal piles and let them go first to pick to pick a pile (property). He will need legal swap agreement. Then I will make a marketing agreement with each party to sell their individual fully owned parcel. Problem solved. I started  by saying “I do not know”. This entire rant started because I watched a 2 minute video by David Burkus which you can watch below. P. S. Concerning your normal first question about “How much is it worth?” I have two answers. • I do not know, it depends. If you are a buyer,

Disruption of Bed and Breakfast and hotels I have been to AirBnB meetups each month to learn more about what is happening. There is an entire industry and supporting ancillary services. Some home owners offer the extra room in their home. There are hundreds of homes and apartments which are booked for short term hospitality to a variety of guests which have different reasons. Some guests want privacy. Other guests may want their family or group to be in one residence behind one door. They may want a larger space inside or outside. They may want to be nearer to a specific destination such as entertainment and business venues or outdoor parks or even learning centers. Some AirBnB providers offer just a place to rest or sleep while others offer an entire experience. These might be outdoor teepee and tents near national parks or they convert a train caboose to residential living. I know a provider host in Houston that owns an 8 plex multifamily building. Each unit is dedicated to be a hospitality host unit. He has painted one unit interior to look like a colorful rubics cube. There are ancillary services to help manage these hospitality doors. There are services dedicated to house cleaning, accounting, booking and entire property management. They install special Wifi internet door locks and outside entry door video surveillance. There are providers of furniture and kitchen utensils Some entrepreneurs are doing AirBnB arbitrage to bear the entire burden and responsibility of providing hospitality. They long term lease homes or apartments and then advertise short terms AirBnB hospitality. They have a domain name and website to lend credibility so that landlord will sign a long term lease with the assurance that an AirBnB provider will be a better cleaner tenant. Some hosts have enough doors to hire a local manager host. The hotel hospitality industry complained to city officials that this private hospitality distruption was unfair because hotels charge a city tax to guests and forward it to the city. The Guests log into the online booking website which had maps, photos and descriptions of each property of hospitality provider. They can filter the type of accommodation the guest is looking for. The prospective guest can see the evaluation and reviews of previous guests. They can search by map area, by price and by the number of beds. The guest can specify if they are looking for an entire home or just one room. After the guest leaves, the website server sends an email survey asking the guest to evaluate the service of the hospitality provider. The best rating is “SuperHost”. That is what you want when you have a party at your home. There are online internet advertisements for you to attend seminars, webinars and books to start a successful hospitality business. There are 2 Houston AirBnB Host facebook groups

Should I buy real estate from a wholesaler Should sellers work with a real estate wholesaler? Wholesaling real estate is the practice of acquiring properties at discounted prices and reselling them for profit. A real estate wholesaler enters a contract with a property seller, markets it to potential buyers, and assigns the contract to the most appropriate buyer On the internet I found the 15 reasons to be a real estate wholesaler. 1. Fast Entry (Great For The Beginner) 2. Simple To Learn 3. Quick Results & Quick Cash 4. No Cash Or Credit Required 5. Location Independent 6. Valuable Experience 7. High Demand 8. Larger Paychecks 9. High Return On Investment 10. Ability To Work With Bird Dogs Or Deal Scouts 11. No Need To List Properties 12. No Membership Charges 13. Volume Potential 14. Minimal Risk 15. No Repairs Involved This morning I was watching TV and saw a 30 minute show hosted by Superman, actor Dean Cain. He told us about an opportunity to phone to get a reservation for a two hour live seminar about real estate Wholesaling and financial independence with no money. Stop living paycheck to paycheck. You owe it to yourself and your family. Anybody can do this program. Phone to get 4 VIP tickets and get the investor toolbox. What do I have to lose? I can get some free gifts. The TV commercial has a disclaimer at the bottom that said “The student success herein are not typical”. I Found a wholesaler online that said “Honestly there aren't much benefits to selling to a wholesaler. I am a wholesaler and I will admit that...” “However, I market to find people that have a strong desire to sell.. If you are marketing and you get a "tire kicker" who wants full retail or more for there house its going to be near impossible to make a deal out of it... especially with the housing market being so hot. Yea I do let the seller know I pay cash which saves fees and I close fast and such, but deals come from problems... find out the problem and why they want to sell and base your whole pitch off how selling to you solves those problems.” WOW Are you looking for a good deal. You may need to drive to one hundred properties. Good deals require a distressed seller as result of death, disease or divorce. (Maybe, sometimes) It is more likely that you will find a fair deal to add value If you consider buying from a wholesaler, then ASK this … Do you believe the wholesaler financial numbers? Do you have the right to inspect and the unrestricted right to terminate , even if the sky is blue … and get your earnest money refunded. Can you include all the inspectors you choose including • Building inspector • Mold inspectors • Pest and termite control • Hydrostatic plumbing inspector • Environmental consultants who may recommend soil testing • Asbestos sample testing. Are the inspectors limited to specific hours or specific days? Is seller required to turn on all utilities? You might also lose your earnest money and inspection money and acquisition costs due to Banks and government regulations and changes to policy changes by changing personnel which causes snakes to delay the closing date. Do you lose the earnest money if you can not extend the closing date due to an unknown undisclosed competing signed backup contract at a higher price? (hint … I have a cure to this potential problem.) Will the lender require additional due diligence documentation from the true legal current owner? Can that seller provide the additional required docs? Is the contract with wholesaler promulgated and approved by the Texas Real Estate Commission or Texas Association of Realtors? Or must you pay an attorney to review the contract. If the title company finds a cloud to the seller’s title or...

I recently had a seller client phone to say she had received a solicition from an iBuyer (internet Buyer) that wanted to bid on her house. I contacted the iBuyer and they decided not to make an offer. The reason was inane and innocuous. I am guessing the seller asking price was to high. iBuyers advertise nationally to buy your house quick. The main iBuyers are Offerpad OpenDoor Knock Zillow Instant Offers Redfin Now I am told they buy 10% of the homes sold. That seems like millions of homes worth Billions and Billions. They exist to help consumers avoid pain of the real estate process. They will offer to buy a home with a desktop appraisal and no inspection and no licensed appraiser inside your home. It will happen quick. Several people have argued about the reality of getting a fair price. This seems vague to me, but it has been written that it might cost the seller an additional 1% to use an iBuyer. It depends on opinion as to whether the buyer got a good price. Ask ten people the value and get ten different answers. Some agents might comments that iBuyers offer 7 to 12 % below the market value. Thus the seller nets less than using a traditional broker for 6% sales commission. The iBuyer also uses a discount broker or an employee to sell the property. The argument is that …… even if the iBuyer sometimes loses money on a transaction ….. they do so many transactions that they do make money …. To off set an occasional loss. iBuyers are involved in one out of 10 of residential home transactions. Hard for me to believe. The reason for this disruption is In summary, iBuyers help to avoid pain of the real estate process. I started this podcast about Snakes Landmines and Grassfire because I have seen the pains of the process which are caused by changing personnel, institutional policies, guidelines, bureaucratic rules and laws. I suggest that experience can foresee some problems which can be averted by just avoiding some buyers or writing a contract to prevent the future possible problem …. To transfer the pain to the other side of the transaction. Have 49,000 hours of transaction experience to avoid the rocks that hide snakes or just kill the snake. Certainly, there is one problem can only be cured by time and pain. That problem is caused by client unrealistic expections. Sellers normally want a sales price that is not possible today …. But Maybe later possible with years of price inflation. They often choose a broker that will promises a higher price, only to be disappointed later and then reduce the price to a reasonable price. Then the seller has more time to again realize that another price reduction is necessary. Sellers frequently blame it on the broker and find another broker that will price the blue sky. I mention that the issue is NOT price …. The first question to ask is “When do you want the money?”. Then set the sales price. Buyers want to find a good deal at wholesale, however sellers price at unrealistic retail prices. The buyers should look for properties to add better management and add features to increase property value. It helps to have the experience as a Senior Property Tax Consultant to know to how to determine value of thousands of property. It is good to know Appraisal Theory and the 3 methods to derive value. The comparable approach, reproduction approach and the Income approach. Be sure to ask for our online digital app which can help you calculate your property value today, using the income approach. It is easy to understand and use. Use it on your desktop or your phone. Certainly, most snakes can be avoided by writing the snakes out of the contract. Most agents know how to fill in the blanks on the contract, but most agents do not know which blanks and boxes to be careful.

What is Contingency? Which is better Contingency or Non-Contingency real estate commission? How can real estate buyers get a rebate on their next transaction? How can Sellers get reduced sales commissions? Contingency is defined as - Dependence on chance or on the fulfillment of a condition; uncertainty; fortuitousness: . A contingent event is a chance, accident, or possibility conditional on something uncertain: Let me help us discuss this in context. In 1994 I was licensed as a real estate agent with Coldwell Banker in Houston. The have both company offices and franchise offices in the United States and around the world. With approximately 80,000 agents, they sell and lease residential and commercial properties. In 2010 I decided to be an independent broker and have No agents, thus allowing me to have more time to help important clients. One reason for leaving mother Coldwell Banker, was to offer the public, the option for non-traditional compensation fees. An attorney will work with a client on a contingency or Non-contingency compensation plan. With a contingency pay plan, the attorney bears the cost of the research and court costs, however the attorney may get 40% of the awards to the client. A $2,000,000 award to the client would thus yield $800,000 to the attorney. Hopefully that would be more than the costs incurred by the attorney. However, the attorney might prefer to work for an hourly fee which is not contingent upon a successful result. The work might entail legal research or require a lawsuit which is not likely to be successful. The attorney would probably require the client start with a startup retainer fee. For 60 hours of work at $400 per hour, the attorney would bill $24,000 legal fees. Although I have no scientific research data to prove these numbers, we agreed that real estate brokers get paid by 25% of their customers. Meaning that brokers work on contingency and only 1 of 4 customer relationships resulted in a pay day. How can that be? Last year, I was helping a client to buyer a home in partnership with his brother. I had previously helped him to buy a commercial property. Since he trusted me and I also had many years of experience with residential homes, we started looking for a home. He as preapproved by a mortgage broker. As it turned out, the mortgage broker encouraged the buyer to finish his tax return in February to help get preapproved. The mortgage broker told the buyer that it takes 30 days for the tax return to be recorded and transcripted online …. As proof to the lender. However, the mortgage broker did not know to tell the buyer that the buyer also had to pay the income taxes and did not know that the buyer waited until April 15 to pay the taxes. When we submitted our offer to buy a home in March, the buyer’s transcript had not yet been put online until June and the seller of the home would not wait and offered the home to another buyer. It was actually kind of crummy, because the he was a first time buyer. He did not know that 15 year old homes can have movement which causes small sheetrock cracks, which can be easily patched. Welcome to Houston. He did not believe me that small sheetrock cracks may not be major repairs, but should be seen by a licensed inspector. The buyer decided to not trust me. But his brother phones me frequently to have a nice pleasant discussion. Once I was helping a man sell a home and found a buyer. He was distraught be the divorce of his wife and committed suicide one week before the final closing docs were to be signed. Some buyers can not find a home which they want. The point is that agents waste a lot of time which does not produce a pay day. As a result,

We did a podcast about each paragraph about the Commercial Texas Promulgated contract. So why did we not discuss the 1 to 4 family contract? Because the commercial and residential contracts have similar features except the commercial is several pages longer and has more complicated wrinkles. For my friends that want to sell residential homes, I do not want to appear disinterested or unqualified. I spent over 12 years selling single family homes and now I only help friends or absentee landlords who need snake proof boots on the ground near the house. I do not specifically advertise or farm single family neighborhoods. Maybe because generally single family homes are less complicated with fewer snakes, landmines and grass fires. However, sometimes there is an unexpected snake in the grass. The problems are not caused by the home. The challenges are caused by people and institutions with changing personnel, guidelines, policies, rules and laws. Let’s talk about the differences between the residential and commercial contracts and what to expect. What rocks to turn over and which bush to avoid. In not specific order. Residential properties may have different tax laws and exemptions. Your home is your castle. Pay careful attention to the effective date, the day the contract clock begins to tick. Residential contracts are effective and start which both buyer and seller have signed the contract. Commercial contracts are effect and start the date the title company receives the contract. The earnest money from buyer is due within 3 days, which includes weekends and holidays. The effective date starts the option feasibility period which then starts the days to terminate if you can not get the loan specificed in the Commercial Financing addendum. Therefore we should know the residential and commercial contracts have different effective dates. A SFR is required to have a “Seller Disclosure Statement”, preferably when the home goes on the market, however it can be 7 days after the effective date. Commercial Contracts are not required to provide a Property Condition Statement. Although there is a box to check, which can require the Condition Statement. If I represent the buyer and contract requires seller provide the State Form Property Condition Statement, and the seller instead provides private brokerage company form statement of condition ….. is the seller then in breach of the contract and can the buyer then void the contract at will? Maybe. That can be our secret … do not mention it to anyone. Residential closing date can normally be written for 45 days after effective date because residential appraisals are easier and quicker Whereas commercial closing dates are normally 75 to 90 days after the effective date. This allows several weeks for a $2,000 Environmental Phase One study by an environmental consultant. (maybe not with multifamily). I have never had a lender require an environmental study on a multifamily property, except for one bank with a new inexperienced loan officer who had some experience with warehouse loans. Several years after selling a 40 unit multifamily, I got a phone call from owner who was remodeling several units. He sais that the remodel contractor required environmental guidelines to remove and dispose of some sheetrock. Another contractor in previous year had caulked the joints between the sheetrock with a caulk which contained asbestos, which he bought from a well known home repair big box retailer. A SFR contract may also include Owner Association Addendum for docs to be given to buyer and also other docs which a big brokerage firm as created from their attorneys. Commercial loans are not regulated by government and lenders can offer different kinds of loans, depending on how strong the buyer is. The residential loans are more standardized in order to be packa...

If you can not get a loan, don't make an offer.  Gosh I am cold. Here is a discussion with the Queen of the Poodle Ranch.  We discuss the Commercial Financing Addendum of the Texas Promulgated Real Estate Contracts. It stipulates the criteria and terms, which might dictates if  buyer gets return of the earnest money due to the financing terms. The other parts discuss issues regarding institutional third party loans, Assumable loans Seller financing. It also stipulates issues regarding credit worthiness. Commercial Financing addendum Similar to the Residential addendum. Paragraph A (1) states the amount of financing. Be sure to have the same amount as the main contract Paragraph 4 which states the amount of financing, the years of interest to be paid and maximum % interest rate and the years of amortization Paragraph A (2) states maximum number of days for buyer to notify seller of buyer inability to get a loan with those loan conditions and criteria. Therefore if the bank will not loan enough funds at a rate specified by the buyer, then the buyer can terminate get refund of earnest money. Keep in mind that seller does not care about the buyer loan terms, but wants to know quickly if buyer can borrow the money. If buyer does not notify seller, then the earnest money is not refundable under the terms of the Financing addendum. For unique properties with few comparable properties or when buying a property with low occupancy and high vacancy or Properties needing repairs or remodel or Reasons not yet discovered, It may be wise to NOT make the contract subject to nor contingent upon buyer ability to get a loan. It is a box to Not check is Paragraph 4 of the main contract. My attitude is …. If you can not get a loan, do not make an offer. I contracted to build a one story home on two acres and the appraiser for the bank loan had to compare to homes which were two stories on smaller land. I presented a seller of a 4 plex which did not have a kitchen in one unit and did not have a bathroom in another apartment. I represented a seller of a commercial 5 plex and buyer tried to get a loan for a residential four plex. Know that if a party should rightfully received the released earnest money and the other party refuses to sign the release of earnest money …. The party can file lawsuit and get the earnest money plus damages plus legal fees. After appro one year, the title company will send the disputed earnest money to the State of Texas…. Which will release it to the buyer, upon reasonable request. Yes, it happened to my buyer client. Paragraph B deals with assumable loans and states the lender, amount to be assumed, and date of the loan. Para B (3) states that the earnest money if refundable if the loan to be assumed is greater than “X”. It also says that the earnest money is refundable if the “Assumption fee is larger than “X”. Assumption fees are normally between ½ and one percent. Normally, the lender will require that the buyer qualify for the assumption, thus it is called a “Qualified assumption” The amount that buyer must come to the table with is the sales price minus the balance of the assumable loan and maybe the assumption fee, if negotiated. Paragraph C stipulated the terms of seller financing. Normally a lender will not allow together both an assumptions and seller to financing of the down payment. It stipulated if the borrower will be personally liable for the loan. IT stipulates who is responsible for the property taxes and insurance. Paragraph D discusses credit approval of the buyer for loan assumption or seller financing. And the number of days seller has to terminate if buyer is not credit worthy.

In this podcast, we discuss paragraphs 16 through 26 of the promulgated commercial contract for properties with improvements (buildings, not just vacant land).  We discuss when the clock starts for duties,  disclosure, (or not), condemnation and acts of God, and also the drop dead date (the contract, not people).  This makes the contract sound biblical. Previous podcast episodes have discussed up through paragraph 15.  It would be a good idea for you to listen to those beginning episodes. What is the latest at the Poodle Ranch? I have been picking pecans and raking leaves to find them. Got a bushel Paragraph 16 - What happens if the subject property is damaged before closing If the seller does not restore the property • The earnest money and option feasibility fee are returned to the buyer • Extend closing for 15 daYS • Buyer can take the property in current condition and get any insurance proceeds and get a credit from seller for the insurance deductible amount. IF the property is condemned by a jurisdiction, buyer can terminate and get refund of EM and option feasibility fee Or defend the condemnation Para 17 – IF there is a lawsuit the loser pays the attorney fees Para 18 – What happens to the earnest money if the deal does not happen. The party that defaulted or was in breach should release the earnest money to the other party. If they do not, then the parties can send written notice to other party asking the okay to release to the party that asked to receive the money. If the title company does not get written permission to release the EM, then a party can file lawsuit to receive damages, EM, attorney fees and cost of the lawsuit. It is easier to release the EM. Para 18 Also let you check the box for buyer and / or seller to do a 1031 tax deferred exchange. We will discuss this tax code in an upcoming podcast. Para 19 allows seller to agree to provide a Property Condition Statement (similar to a residential Seller Disclosure Statement, which requires of every single family home. Or check the box saying that the seller is not aware of bad property conditions. There are two ways to view this issue. It can be argued that if seller knows of significant problems with the property, the seller should disclose to avoid a lawsuit in the future. The other view is that seller should not check either box and make not statement, and encourage buyer to hire a licensed building inspector. I am inclined to disclose important significant problems with the property that seller is aware. I do not need legal challenges. Para 20 says that buyer and or seller can receive notices by their email address. I am inclined not to agree to notice by email because it can get lost in cyber space. Para 21 say parties agree to mediation to solve a dispute before further litigation. Para 22 says the contract is binding and specifies the addenda which are to be included with the contract. Do not forget to include all the addenda. It may bite you later. Para 23 says time is of essence ? Para 24 is important because it sets the clock to start and you need to know when you must perform certain duties. The effective date is the day that the title company receives the contract. Get a written receipt from the title company with date stamped. Para 25 - The residential contract effective starting date is the day that both buyer and seller sign the contract, and is not related to the title company. Important distinction. Para 25 also discussed flood districts, sewer areas, and flood areas and lead based paint, mold remediation certificates Para 26 includes the drop dead date which is the deadline for signatures of both buyer and seller.

What is new at the Poodle Ranch? In past episodes, we discussed through paragraph 11 of the Commercial Purchase contract This episode discusses Paragraphs 12 through 15. How to stop Snakes -SGL 0012 What is new at the Poodle Ranch? Recently we discussed through paragraph 11 of the Commercial Purchase contract Paragraph 12 to gives buyer and seller a space to provide for special specific concerns. As a Senior Property Tax Consultant, I know that the County Appraisal District subscribes to the sales prices from property sales at commercial real estate websites and residential MLS HAR.com If not on MLS we can insert language into Paragraph 12 Special Provisions to say “Seller and Seller’s Broker will not disclose the sales price to anyone except seller’s accountant and the IRS.” We do this because, after the sale, the seller’s broker will change the status on the advertising website and immediately a box pops up, asking to record the sales price. This paragraph can say that broker can not disclose and therefore the broker will insert a price $1. Know that Texas is one of 5 Non-disclosure states which does not require seller to disclose the sales price. However, they unsuccessfully tried to pass a bill to change that. Additionally, the county appraisal district will send a letter to the seller, asking the seller to remit the sales price. And the agent may get a phone call asking the sales price, which is confidential personal information. IF the price was $1,000,000 and taxable appraised value is $700,000, the difference would increase taxes by approximately $7,500 per year. After inspections a buyer may ask for the seller to do repairs, which may result in repairs which are to satisfactory to the buyer. Or the buyer may ask for $$ in lieu of repairs. In a commercial contract, we can add language that says “Seller will deposit $ “X” of sale proceeds into an account at the title company for buyer repairs.” This is better than reducing the price because it requires that buyer bring less cash to closing table. Often lenders will tell the title company to give the money to buyer at closing. For large repair dollar amounts, some lenders may require the funds be sent to the lender for escrow. Then lender will send the a representative to the property to verify that buyer did the repairs and lender will then send that escrow repair money to buyer. For residential contract, regulated lenders do not allow cash from seller to buyer, except we can use paragraph 12 “Settlement and other Expenses” Whereby seller can contribute to buyer closing costs and mortgage fees. This would be in lieu of buyer repairs. However, buyer should be careful not to insert a dollar amount greater than what regulations allow. It depends on the type of residential regulated loan. Talk to the loan officer. This paragraph only applies to residential loans. Some lenders do not want multi-tenant properties where the leases are month to month. Ask your loan officer in advance of signing the contract. The lender may require buyer to deposit 6 months of rent with the lender until new leases are signed with tenants. Paragraph 8 says that seller can not sign leases, therefore we can insert language in paragraph 12 Special Provisions which says “Seller will sign current leases with tenants which vary in length from 6 to 15 months at an amount not lower than current lease rate.” The lender wants leases and does not want all tenants to move out in the same month. Buyer wants short term leases because the buyer wants to later decide the price and terms of leases. Frequently, buyers and sellers wat their pet clauses in Paragraph 12 Special Provisions which are not necessary because other paragraphs already says the same thing and are redundant. The other agent does not understand the contract or/and...

Large snake pits herein. There is language which we can use when negotiating the contract to avoid problems after the option feasibility period of the contract. Last week we discussed Paragraphs 4,5 and 6 of the commercial contract. Again I reiterate that the 1 to 4 family residential contract is similar to the commercial contract, except the commercial contract has more pages, because there are more snakes. Paragraph 7 Property Condition Para 7 A states the repairs that the seller will do before closing. I can not remember when I used this paragraph, for reasons which will be evident later in this podcast. Paragraph 7 B - is very important because it gives the buyer time for building inspection by a licensed inspector and a property environmental study, which may be required by a lender. The consideration paid to the seller for the feasibility period is negotiable. Why is money paid to the seller for time? If you pay for it, you own it. If you do not pay for it, a gift can be revoked. Additionally, the seller wants “Good Faith” money. No Free Look. It might be a small amount if there is doubt about the ability to sell or if seller needs to deliver questionable documents. The length of the feasibility period may need to be extended in Paragraph 7 B (2) …. If a preliminary tour indicates a possible need for and EPA Phase 2 soil sample tests. Paragraph 7 D says that the seller will deliver feasibility docs to the buyer within “X” days. Those docs may be required by Buyer’s bank lender. Frequently buyers and inexperienced buyer agents check every box to get every document. Primarily because they do not know what the contract language means nor the use of those docs. As an example, the Buyer will ask for copies of notes and deed that the Buyer will assume, but the loan is not assumable. They ask for water and sewer utility capacity letters from the city, but the Buyer does not expect to build new construction Or the city wants to see building plans in order to provide the utility capacity letter. The buyer may want copies of insurance policy, but insurance is not transferable nor assumable. The buyer wants “ As-Is” construction plans for a 40 yeara old building that is 2 stories short.?? Buyer wants property tax statements, but that is online FREE. Paragraph 8 B may be necessary to know if the landlord gave free rent to a new big box store instead of money to install walls, bathrooms, and heating. This is not usual with multifamily apt units. However, sometimes I have to tell buyer agents “No estoppel Certificates” signed by tenants. Some do not speak English. Paragraph 9 B (1) Says Seller’s broker may pay buyer broker a commission at closing or seller will pay buyer broker at closing. The last page of contract states “How much” the seller’s broker will pay buyer broker Some buyer agents will inadvertently say that the buyer broker will be paid by BOTH the seller and by the seller’s broker. Oops. Change that …… One but not both. Paragraph 10 Closing Is “X” days after the feasibility inspection period or a specific date. Seller wants the money quick or put it back on the market. Seller does not realize the world has changed in last 10 years. More government regulation and lender bureaucrats have more loan policies The bank clerk takes the loan application out of file drawer to review, one week before closing …. Because the clerk is busy with other loans. The clerk then asks buyer and seller for more paper documentation and clerk reviews the additional docs. The clerk gives the file to the supervisor for review. Then the supervisor wants more info from buyer and seller. Some the info is not available and we debate. Last year a bank lender wanted the buyer to pay for one year of hazard in...

Last several weeks episodes we discussed the commercial real estate contract paragraphs 1 through 3.  Today we discuss paragraphs 4 though 6 which concern Third Party Financing, Loan assumptions, and Seller financing.  Additionally we discuss Earnest Money and the Universal Commercial Code searches. What should buyers and sellers watch for? Be sure to subscribe to our eye-opening newsletter in the box on this page. Last episode we discussed the first page of the Texas Association of Realtors Commercial contract It is similar to the 1 to 4 Family Residential contract, but longer …. 14 pages instead of 9. Para 4 can be very challenging with 3 parts dealing with Third Party Financing Assumption of existing loan Seller financing If the property is unique, then it may be difficult to appraise. If you are a seller, you may wish to NOT check the box which makes the contract contingent and depending on the attached Third Party Financing Addendum This means the lender must be willing to loan the amount noted in papr 3 and 4 By NOT checking this box, the contract can not be terminated if the buyer can Not get a loan. If the property appraises at a low value, the contract is still binding. Some buyers are not confident of their ability to get the perfect loan with great terms, By Not making the contract, contingent upon the Third Party Financing Addendum. If the buyer can get a loan, but on terms with are less than the criteria expected in the separate attached Third Party Financing Addendum, then the buyer can not terminate days before the expected closing date. If the contract is written such that it is not contingent on the Third Party Fianncing Addendum. Then the earnest money is not refundable to buyer after the inspection feasibility option period. If the property appraises low and the contract is contingent upon the terms in the attached Third Party Financing Addendum, then the buyer can terminate and receive the earnest money. Assumption Concerning assumption of existing loan, a buyer may wish to see a copy of seller’s loan note in advance to know before acquisition costs …. 1) If the is a bank loan assumption fee of 1% 2) If the seller has a pre-payment penalty Seller Financing – will it be a 1st lien or 2nd lien. The contract should stipulate who writes the loan note? If seller’s attorney writes the loan note the day before final closing ….. it may be one-sided and have terms which a prudent borrower can not agree to. Thus buyers may lose earnest money and acquisition costs if the buyer backs out. Maybe the contract should stipulate that the title company attorney will write the loan note. Paragraph 5 It is common for earnest money to be 1% of the sales price, however if the property is hot, it may need to be 10% of sales price. They call it “Earnest Money” ….. I call it “Good Faith” money. If the buyer abides by the contract, then the buyer can terminate to get the earnest money refunded to the buyer. If the other defaulting party does not sign the “Release Of Earnest Money” form, then a penalty at court might be 3 times the earnest money plus legal fees. Frequently sellers do not realize the time and effort it takes to the finish line. In the recent 9 years regulations and lender policies have become strict and cumbersome. Or the seller want the ability to close quickly or find another buyer. But life happens to create unexpected nightmare snake pit delays, which we have discussed in other podcasts. Snakes sometimes get hiccups or trigger landmines near appraisers, slow lenders and bad environmental studies. Therefore sellers can be placated with Paragraph 5B whereby buyer deposits additional earnest money, thus the seller becomes convinced that buyer is confident that deal will happen or lose the additional earnest money....

The contract to purchase a commercial property is similar to the contract to purchase a 1 - 4 family residential property, however commercial properties are more apt to be irregular with more snakes, landmines and grass fires. The commercial contract is several more paragraphs and pages. We discuss page one with the first 3 paragraphs. Although the form is fill in the blank, there are challenges which depend on the uniqueness of he property. We need to be concerned with the circumstances of the buyer and the wishes of the seller. Often the wishes of the seller are diametrically opposed to the buyer. Sometimes other involved people and institutions, such as inspectors and lenders, can not oblige the time table of the seller.  This will be a good listen for you. The Great of State of Texas gives me authority to use approve contract forms and amendments. Can not scratch through and change, however the principles, buyers, sellers, tenants and landlord can scratch through, change, rewrite paragraphs and then initial. They should consult me first to discuss correct words, ramification and unintended consequences. Who can sign? • Husband AND wife to make it binding • Legal owners and their legal reps • LLC requires the Managing Member • Uniform Gifts to Minors Act – parents or guardians • INC. = Corporate officers with authority means President and Secretary. • Durable Statutory Power of Attorney - notarized The principals involved will need to show proof of authority to the title company. In Paragraph One stating the names of buyers and sellers…. Sometimes the client wants to write “Or Assigned”, but there is a different place in the contract for that. Paragraph 2 - “Property” – Get the correct legal description. Know what your are doing. An address is not adequate nor legal. The post office gives address to deliver mail Vacant land do not have an address, because not deliverable. A correct legal description in necessary because other involved instituions may use the contract. The title company and lender may use your contract words in Para 2 legal description. The buyer may get ownership of part of the property if not done correctly. Review the county tax records for legal descriptions Sometimes we may need an Exhibit “A” with metes and bounds” of the properties, if available. Can get “Metes and Bounds” description from the survey, deeds, title company insurance commitments and court house records. I helped a buyer from California to buy a riverfront home on a bluff, which had 2 acres of land comprised of 6 irregular sized land parcels. I reviewed the county plat maps and correctly wrote the contract offer to include all 6 legal descriptions. He and wife bought the river home and they were happy. 3 years later I was named in a lawsuit because he could not legally ID one of the seven land parcels at his home. His attorney later discovered that the title company insurance commitment had omitted one of the land parcel legal descritions from the title insurance commitment. One parcel had not been identified to have insured ownership of the buyer. I had correctly written the contract to include all land parcels in the purchase. The Title insurance company revised the title insurance commitment. It cost some legal attorney fees. Helped a buyer with 2 buildings which contained 18 commercial warehouses. Each was on approximately half an acre. After the title company received the signed contract, then contract said that ten days later title company would send the insurance commitment. The legal description only included of the two parcels. The county appraisal district had two account numbers, each of which had a separate legal descrition. The county appraisal district had a main address with property account number,

Helping seller of a fourplex asking $400,000. The seller used a furnished apt unit for AirBnB weekly rentals. Buyer did not sign the last page of the contract because buyers agent said it was the last page that would be signed only by the buyer attorney, if there is an attorney. The buyer agent did not speak good English and was partially retired from work. I said that buyer should sign the last page where it asked for the seller signature, other we would not have a good binding contract. I was going to phone the broker of the agent, but first I phoned the agent to appeal again that the contract be signed in full. She apologized and realized that buyer should sign the last page. After the contract was signed and executed, buyer deposited the earnest money at the title company. Buyer then hired an inspector and gave the inspection report to the seller accompanied by an amendment requiring seller to reduce the price by $20,000. A large part of repairs were claimed because the buyer inspector said that the 4 electrical breaker box panels would need to be replaced because they caused a fire hazard. I helped to sell 9 other identical fourplexs on this same city block which had the same electrical panel manufacturer and there has never been a fire. Additionally, the City of Houston Dept of Habitability did an inspection 2 years previous and issued a Certificate of Habitability to the property, which means the property passed a safety inspection. We negotiated to have the seller give the buyer $2,000 for repairs, which would be credited to buyer at closing, thus reducing the funds needed for the buyer at closing. A priced reduction would not have given the money to the buyer for repairs. The buyer hired a lender bank in California with two offices in Houston, the same lender which we will discuss in another podcast. Before closing, the lender wanted a preliminary closing statement to show where the money goes with debits and credits. The title company sent the buyer’s preliminary closing statement. Approximately two years ago, the State of Texas, ceased to use the HUD One with buyers and sellers debits and credits on the same form. The State of Texas mandated that buyer closing statement (which shows debits and credits) be separate from the seller’s closing statement. None of their business. It is the private business to each buyer and each seller. The buyer’s lender insisted to received the old formerly used HUD One. The title company agent found the old software and printed an outdated HUD One form which satisfied the California lender. The title company however used separate buyer and seller closing statement for the final closing. Buyer and seller separately signed the final docs. I instructed buyer’s agent that the seller would move out of the furnished apt unit in 24 hours. The next morning the buyer had a locksmith change the locks on the seller’s furnished apt unit. At one pm, 2 hours after buyer changed the locks, the seller showed up with movers and truck to move the furniture from that furnished apt unit. His key would not open the door. He broke a window and crawled in to open front door and move the furniture out. The phoned the police the next day to make a police report and the downstairs tenants confirmed the incident. What do you think of this?

My most memorable deal in 24 years resulted in me being asked by a prosecuting attorney for the State of Texas Dept of Insurance to be witness in Austin against 3 persons trying to commit fraud. The prospective buyer was part of the scam. You can learn from this series of events which taught me what to watch for. A seller hired me to sell his 24 townhouse style apt units I represented the buyer and seller Seller agreed to  finance himself with 25% down Had 3 offers Asking Price went up each time a buyer made an offer The seller had the George Kastanza approach to negotiating real estate. Every time he rejected an offer, he increased the price. I met a prospective buyer that wanted a multifamily property and we toured the 24 units He wanted to use a title company that He had used several times in the past in Tomball Texas near Houston. The title company had several Houston locations We asked for the insurance company to be a well known title insurance company The seller accepted the offer and I scanned the executed contract and emailed it to the title company. BY phone the title company closing agent acknowledged receipt and also sent receipt by email. Title company acknowledged receipt of buyer earnest money. Buyer decided that he would do the inspections himself because he had construction experience. It was a brief inspection of a sample of the apt units. We received a title insurance commitment from the title company with the name of the insurance company. Several times I phone the title company and they did not answer the phone. Hmmm Frustrated …. I drove to their branch office location in Tomball. No such address. Upon further detailed inspection of the title commitment, I noticed the insurance company name was slightly different from the long actual company name. They inserted the word “National”. I found the phone number of the main office of the named title company and the president said that they did not have an office in Tomball, Texas. The seller and I agreed that we would not cooperate with any efforts from this buyer. We smelled a rat. Both the bogus title company and the buyer did not return my phone calls. Seller reported the incident to the State of Texas Dept of Regulation. Several months later I got a phone call from an attorney representing the State of Texas Dept of Insurance. They were filing suit against 3 persons, two of whom were in Dallas. They had attempted to represent themselves as a title insurance company. I was asked for any evidence which I could contribute. Willingly and Hopefully, I cooperated to help stop this and any future abuse. This was a court proceeding to stop the defendants from representing themselves to be a title insurance company. I had the option of driving to Austin, Or be interviewed as witness on the phone. The 3 defendants did not show up and I did not have to testify. Several months later the seller told me that his name had been forged and deed changed to another owner. Probably for the future purpose of getting a loan and keeping the money. This is probably why the buyer wanted a property whereby the seller had no debt and property had no recorded lien and seller could finance the purchase. He hired an attorney to represent him in courtroom to get ownership title put back in his name. I have discussed this experience with knowledgable title company execs and real estate agents, and they are amazed. The experience did help me to know what issues can smell. 24 years of brokerage experience has help to know a large list of smells and how to avoid them.

I recently finally finished deal to help a buyer acquire a multi-tenant warehouse property built in year 2000. We were fortunate to have a knowledgable experienced buyer and a reasonable seller and agent with 3 years experience. Deals often fall apart for several reasons. The environment for lenders has changed due to several important factors. • Lenders have more regulation and large lenders have supervisors that want to vigorously scrutinize the loan. • Lenders normally are not headquartered in SE Texas and do not know our state law nor contracts. This lender made decisions in California, but has 2 offices in Houston. Mortgage brokers remind the lender to hire an appraiser to complete an appraisal with 17 days Lenders normally do not look at a file until one or two weeks before closing date. A lower level admin reviews the file and asks questions and wants more documentation . Agents and buyer and sellers jump through hoops for more info or they say the info is not available …. Because. Then the admin gives the file to a supervisor. One week before closing date – the supervisor reviews the file to ask more questions and ask for more documentation. (because they can ….. part of the job description) Buyer and seller agents are exasperated and yell baloney and spit. I talk about this because buyer and buyer agent have to expect this when writing the original purchase agreement. To make this discussion flow, we should use the order of the purchase contract …. Which issues are discussed in the contract paragraph by paragraph. In this deal, the seller delivered the contract per paragraph 6, which was 18 years old, before the construction of the building. Therefore the buyer bought a land survey with an elevation certificate and sent it to the lender. 30 days later, the lender asked for an elevation certificate. We therefore reminded the lender that they already had an In paragraph 7 D. The seller did not deliver all the documents required during the time of the feasibility option period, therefore the seller breached the contract. Agent thought all docs had been provided, but was mistaken. But we did not tell them about the breach, because the seller could have then delivered the document in question to avoid contract breach. We (the buyer) wanted to be able to get the earnest money back if buyer terminated. In paragraph 10, The seller and agent have focused to insert early closing date. They want to know early and not drag it out but do not realize the issues are with the lender. They do not realize that the world has changed. We needed to extend the closing date. The lender asked for signed amendment authorizing an extension of the closing date. The buyer is at risk of losing the deal and acquisition costs …. Especially if the seller has a signed backup contract from another buyer at a higher price, which becomes effective if first contract expires. Additionally, we are at the mercy of Acts of God. Once I had a seller that committed suicide one week before the planned closing date. Also, a hurricane can brew in the Gulf, thus no property hazard insurance will be issued and no lender will write the loan documentation until the hurricane is gone. Additionally, buyer’s loan interest rate lock may expire. I expect challenges to close on time, therefore suggest that we insert language into the original purchase agreement to allow an extension of the closing date. Since the lender did not read the purchase contract, we had to remind them which paragraph to read in the original purchase contract. Thus the contract did not expire. I can tell my clients about how to insert that language into the contract. Then 2 days before the second closing date, the lender asked for a signed amendment which allowed buyer ...

Buyers often hire inspectors during the contract feasibility period, but they can not inspect under the floor. Listen to Terry at Herndon Muncey, Inc.  They provide under-slab leak detection, repairs and reroutes for Realtors and the insurance industry.  Win a Laser Measure Ruler The DEWALT DW055E is ideal for layout and estimation. This measurement device allows for quick and easy measurement of up to 55 feet. New winner each month. To get your hands on one of these awesome Laser Measure Rulers, all you have to do is enter! Follow the link below and enter your information. We pick one lucky winner each month. Click Here to enter

The Video Book of Mold As must see, if you suspect Mold Mold Returns By Randy Birdwell (1/10/2003) An old nemesis has returned to Texas. Mold. Hurricane Ike sent us into the Real Estate Center's classic video vault to dust off 'The Video Book of Mold'. Produced in 2002, this video has proven to be as timeless as mold itself. We hope those cleaning up the mess left by hurricane Ike find it useful. (90 min. 44 sec.) http://recenter.tamu.edu/video/videoPlayer.asp?vid=53 And if you really have allery problems you can get more details solutions by watching more videos with more complete info at https://moneyconnect.tamuk.edu/C20209_ustores/web/store_main.jsp?STOREID=6 It is internet training Dr Mani Skaria. a plant pathologist at Texas A & M University kingsville has been teaching graduate course on Mold, Plants, Building and Human health for many years through the internet to graduate students in many parts of Texas. Dr. Skaria is releasing six new courses, nation- wide as continuing education courses(CEU).